Finance


		23rd District PTA Serving Riverside County
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Finance
Sponsorship Guidelines \| Insurance \| Mismanagement of Funds Financial Training Video Click here to view the 23rd District Financial Training Video Must have QuickTime to view. Download here for free. Click here to download the Financial Training Handout that is referred to in the training video. Click here to download a Mileage Reimbursement Form in PDF format. Print this page, fill it out and fax to 23rd District PTA at 951-826-6951, or mail to Denise Moore. (See your directory for address) Click here to download a Mileage Reimbursement Form in Excel Format. After completing page it can be emailed to Denise Moore as an attachment. Please put your name and the date in the subject line. Every PTA Must File a Tax Return This Year -There Are No Exceptions! Reprinted from California State PTA The Communicator, October 2009 *Don’t Throw Away Your PTA’s Tax-Exempt Status* PTAs with gross-receipts normally $25,000 or less, and PTAs with average gross-receipts less than $25,000 over the last three (3) years, file a 990N. PTAs who have experienced a significant decline in gross receipts over the last three years benefit from the simpler 990N form. The 990N return is filed electronically on line at www.IRS.gov/charities. PTAs with Gross Receipts - over $25,000 - and less than $1 million and with assets less than $2.5 million file a 990EZ. PTAs with gross-receipts - over $1 million and/or with assets of more than $2.5 million file an IRS 990. Most unit and council PTAs will not need to file a California 190 or an IRS 990T, unless they are separately incorporated. However, if the PTA has unrelated income in excess of $1,000, these forms are required. Sale of advertising (not recommended) is unrelated business income. Sponsorship income is related income and not unrelated business income. There are exceptions to unrelated business income. Schedule B must be completed if the PTA receives a donation of $5,000 or more from a single donor. CONSULT YOUR TAX PROFESSIONAL! THE CALIFORNIA STATE PTA STRONGLY RECOMMENDS THE PTA USE A TAX PROFESSIONAL WITH NONPROFIT EXPERIENCE TO FILE THE 990 OR 990EZ. The due date for all of these forms is the 15th day of the fifth month after the fiscal year end. For example, a PTA with a fiscal year end of June 30 must file these forms by November 15. Extensions of time to file are available if properly requested using IRS Form 8868. Requests for extension must be made before the due date of the tax return. Letter of Determination (Proof of tax-exempt status) What is a Letter of Determination? Reprinted from California State PTA The Communicator, October 2009 A letter of determination is proof that a PTA is a constituent organization of the California State PTA. It is a packet consisting of: 1. Letter dated 1943 from the Internal Revenue Service 2. Letter from the California Franchise Tax Board 3. Current cover letter from the California State PTA office indicating the specific unit is a constituent unit and is in good standing. This letter also includes the unit’s EIN (Employer Identification Number). The letter of determination should be filed with the PTA's permanent financial records. Why is a Letter of Determination needed? 1. To open a bank account for a 501(c)(3) non-profit 2. For some donation and grant applications 3. To prove the PTA’s tax-exempt status When is the Letter of Determination provided? A newly organized unit receives a letter of determination packet upon its acceptance as a new unit by the California State PTA Board of Managers. A “tentative/pending” letter of determination is sent to the unit upon receipt in the state office of the new unit application packet (which should be sent to the state PTA office within two weeks of organizing by the district). This is the letter of determination that a unit can use to open a bank account. Who requests the Letter of Determination? The PTA president requests a letter of determination from the state PTA office. The state office always sends the letter directly to the PTA president. An electronic copy is sent to the district president. Public disclosure laws require that the letter of determination be given to anyone who requests it. Such requests are directed to the president or treasurer of the PTA in question. The district PTA should not keep letters of determination on hand nor should the district or council provide a cover letter indicating a unit is in good standing. Only the California State PTA can verify PTA status. Where does the state PTA office send the packet? The California State PTA office sends the packet to the PTA president. The PTA president should provide it to whomever requests it. Records Retention Schedule Reprinted from California State PTA The Communicator, October 2009 It is very important that certain PTA records be retained. Listed below are items that must be reviewed on a periodic basis and kept in a safe place. Develop a records retention policy based on this list. _{PERMANENT STORAGE} Annual audit reports Articles of Incorporation Canceled checks, for important transactions (e.g., taxes, contracts) [Checks should be filed with papers pertaining to the transaction] Corporation reports filed with the Secretary of State Legal correspondence Group exemption documents 􀂈 Insurance records: o Accident reports o Claims o Policies 􀂈 Ledgers 􀂈 Minutes of executive board, association and committees (bound) 􀂈 PTA Charter 􀂈 Tax documents: o Exempt status o Group exemption o Letter assigning IRS Employer Identification Number (EIN) o State and federal tax forms, as filed 􀂈 Correspondence with state or federal agencies 􀂈 Trademark registrations Consider getting a file cabinet to keep at your school site so that PTA officers don’t misplace these items at home or move away with them. _{10 YEARS} 􀂈 Financial statements (year-end) and budgets 􀂈 Grant award letters of agreement _{7 YEARS} 􀂈 Payment authorization and expense forms o (receipts attached) for payments to vendors or reimbursement to officers 􀂈 Cash receipt records 􀂈 Checks (other than those listed for permanent retention) 􀂈 Expired contracts and leases 􀂈 Insurance incident reports 􀂈 Invoices 􀂈 Purchase orders 􀂈 Sales records _{3 YEARS} 􀂈 General correspondence 􀂈 Employee records (post-termination) 􀂈 Employment applications _{1 YEAR} 􀂈 Bank reconciliations 􀂈 Correspondence with vendors if noncontested 􀂈 Duplicate deposit slips 􀂈 Current bylaws, approved by state parliamentarian 􀂈 Standing rules 􀂈 Certificates of Insurance 􀂈 Inventories of products and materials, updated yearly When filing records, include the date they are to be destroyed. Review each year or two, at the end of a term. SPONSORSHIP GUIDELINES (Click here to go to printable pdf version of article) The law permits a nonprofit organization such as PTA, without payment of income taxes and without risking loss of tax exemption, to both: Engage in sales activities if any of four conditions are met with respect to such sales activity. Receive corporate sponsorships. FOUR CONDITIONS TO AVOID UNRELATED BUSINESS INCOME TAXATION (UBIT): 1. Sell donated merchandise 2. Substantially all help is donated 3. Activity is not a "regularly carried on trade or business" 4. In furtherance of PTA's exempt purpose . Some items fall in more than one category, such as Girl Scout cookie sales, which fall into three of the four categories. Girl Scouts cookie sales are conducted with substantially all volunteer help (#2 above) If the event is held only once per year it is probably not a "regularly carried on trade or business." Exception - Christmas Cards or Christmas Trees. (#3 above) The Girl Scouts maintain that their cookie sales are a "prop" to help carry out their charitable mission for which they were organized. It is part of their program to help girls mature. (#4 above) Gives the girls confidence. Teaches sales skills. Teaches how to count money. PTA & QUALIFIED CORPORATE SPONSORSHIPS Corporate sponsorship is a means of funding in which a corporation provides cash, products, or know-how to a charitable or educational organization in return for acknowledgement of thanks. The acknowledgement of thanks generally takes the form of public recognition for the sponsor's support. Sponsorships are an appropriate means of funding projects and programs that promote the objectives of an organization. Certain guideline must be followed to ensure that the PTA's Noncommercial policy is adhered to. ACCEPTABLE–Acknowledgements – It is acceptable to include the transmission or display of a sponsor's logos and slogans that do not contain comparative or qualitative description of its products and services. It may include sponsor locations, telephone numbers, and value-neutral description of a sponsor's product line or services. UNACCEPTABLE - Acknowledgements that include advertising (Endorsements) - To the extent that the acknowledgement exceeds mere identification and, instead, promotes the sponsor's product or services, the recognition may instead be treated as advertising rather than acknowledgement. Price information would generally be treated as advertising rather than acknowledgement. Any inducements to buy, sell, rent, or lease a sponsor's product or service would likewise be treated as advertising rather than donor acknowledgement. FOLLOWING PTA'S NONCOMMERCIAL POLICY Do not make a qualitative judgment on the sponsor's products or services. Do not include comparative language or language that implies good quality in the acknowledgement. Do not permit the sponsor to write the acknowledgement of thanks. Do not ask your members or the public to buy the products or services of the sponsor. Do not advertise a product or service. Do not endorse a product or service. PERMISSIBLE ACTIVITIES Give the corporate sponsor an acknowledgement of thanks in return for the donation. Identify the sponsor's name, a picture of their product, an address, phone number, Web page. Include the logo or slogan of the sponsor, for example: "Ford, Where Quality is Job One" or "Ford, Makers of Lincoln Mark VII". Provide free product samples. For example, it is acceptable to have a banner which states, "Pepsi: Valued sponsor of the California State PTA Convention - free samples at booth 56". PROHIBITED ACTIVITIES Do not include any comparative statements such as, "MCI is better that AT&T!" or "Chevy: Best Car in America!" Do not call for someone to purchase a product. For example, "List your home with Century 21 today!" or "Bank of America: Open an account today!" Do not hang a banner that states, "PTA hates Coca-Cola and loves Pepsi." SPECIFIC SPONSORSHIP CONTRACT ISSUES ROYALTY Percent of Gross Sales PARTNERSHIP Percent of Net Profit Under new regulations, it is acceptable for PTA to agree to an exclusive sponsorship. An exclusive agreement is one that prohibits competitors of the sponsor from selling at the event. The portion of the payment that reflects the exclusion element is taxable. It is acceptable for PTA to receive payments structured as royalties. Royalties are a percentage of gross total sales, regardless of whether the person paying the royalty makes a profit or a loss. The royalty is paid for use of the PTA name and logo. It is NOT acceptable for PTA to enter into a partnership (share of NET PROFITS) of a business. The PTA may provide a hypertext link from the PTA's Web site to the sponsor's Web site. But PTA must be seen to be "passively" allowing its name and logo to be used. PTA may not be too actively involved in soliciting traffic to the site. The PTA may not be characterized as endorsing the products offered on the site. This not only violates PTA noncommercial policy, but also may result in Unrelated Business Income Tax (UBIT). Additional information regarding PTA Fund-raising, Sponsorships and PTA's Noncommercial Policy can be found in Section 59 of the Finance Section of the California State PTA Toolkit. Information on the Noncommercial Policy is also located in the Bylaws for Local PTA/PTSA Units, Article III, a & b. Top of Page INSURANCE Download the 2009 Insurance Loss and Prevention Guide (English Version) Top of Page Knowledge is Power and Protection PTA Insurance information will be coming soon. It comes every year and can not be avoided. In fact it is mandatory and a stipulation of being a unit in good standing. “Participation in the California State PTA insurance program is required for all PTA districts, councils and units. The California State PTA arranges coverage; districts are notified of the cost for insurance in the fall. Premium costs vary depending on state wide losses during the previous years.” (California State PTA Toolkit) Unit premiums this year are $220 per unit (school site), plus an extra 5% for Workman’s Compensation of any wages paid over $1,000. Council premiums are $120 per council, plus the extra 5% if applicable. When the insurance packet is received, please remit completed forms along with premium payments through channels in a timely manner (by the given due date). Another key element of your insurance is the Insurance and Loss Prevention Guide. The hardcopy of the guide is mailed to all units, councils, and districts annually in the Fall Service Mailing from CSPTA—due out this month. An electronic version of the insurance guide was included on the CD in the Summer Service Mailing. Always consult this guide when planning any PTA activities. It tells you which activities are covered and which are not. You cannot proceed with activities that are not covered by insurance without assuming liability! If you have questions contact the insurance directly, it is a service for which you have paid. Top of Page Top of Page
Home \| Officers \| Councils \| Calendar \| PTA Areas \| Bylaws \| Dateline \| FAQs \| Resources & Links \| Site Map


		23rd District PTA Serving Riverside County
Home \| Officers \| Councils \| Calendar \| PTA Areas \| Bylaws \| Dateline \| FAQs \| Resources & Links \| Site Map
Finance
Sponsorship Guidelines \| Insurance \| Mismanagement of Funds Financial Training Video Click here to view the 23rd District Financial Training Video Must have QuickTime to view. Download here for free. Click here to download the Financial Training Handout that is referred to in the training video. Click here to download a Mileage Reimbursement Form in PDF format. Print this page, fill it out and fax to 23rd District PTA at 951-826-6951, or mail to Denise Moore. (See your directory for address) Click here to download a Mileage Reimbursement Form in Excel Format. After completing page it can be emailed to Denise Moore as an attachment. Please put your name and the date in the subject line. Every PTA Must File a Tax Return This Year -There Are No Exceptions! Reprinted from California State PTA The Communicator, October 2009 *Don’t Throw Away Your PTA’s Tax-Exempt Status* PTAs with gross-receipts normally $25,000 or less, and PTAs with average gross-receipts less than $25,000 over the last three (3) years, file a 990N. PTAs who have experienced a significant decline in gross receipts over the last three years benefit from the simpler 990N form. The 990N return is filed electronically on line at www.IRS.gov/charities. PTAs with Gross Receipts - over $25,000 - and less than $1 million and with assets less than $2.5 million file a 990EZ. PTAs with gross-receipts - over $1 million and/or with assets of more than $2.5 million file an IRS 990. Most unit and council PTAs will not need to file a California 190 or an IRS 990T, unless they are separately incorporated. However, if the PTA has unrelated income in excess of $1,000, these forms are required. Sale of advertising (not recommended) is unrelated business income. Sponsorship income is related income and not unrelated business income. There are exceptions to unrelated business income. Schedule B must be completed if the PTA receives a donation of $5,000 or more from a single donor. CONSULT YOUR TAX PROFESSIONAL! THE CALIFORNIA STATE PTA STRONGLY RECOMMENDS THE PTA USE A TAX PROFESSIONAL WITH NONPROFIT EXPERIENCE TO FILE THE 990 OR 990EZ. The due date for all of these forms is the 15th day of the fifth month after the fiscal year end. For example, a PTA with a fiscal year end of June 30 must file these forms by November 15. Extensions of time to file are available if properly requested using IRS Form 8868. Requests for extension must be made before the due date of the tax return. Letter of Determination (Proof of tax-exempt status) What is a Letter of Determination? Reprinted from California State PTA The Communicator, October 2009 A letter of determination is proof that a PTA is a constituent organization of the California State PTA. It is a packet consisting of: 1. Letter dated 1943 from the Internal Revenue Service 2. Letter from the California Franchise Tax Board 3. Current cover letter from the California State PTA office indicating the specific unit is a constituent unit and is in good standing. This letter also includes the unit’s EIN (Employer Identification Number). The letter of determination should be filed with the PTA's permanent financial records. Why is a Letter of Determination needed? 1. To open a bank account for a 501(c)(3) non-profit 2. For some donation and grant applications 3. To prove the PTA’s tax-exempt status When is the Letter of Determination provided? A newly organized unit receives a letter of determination packet upon its acceptance as a new unit by the California State PTA Board of Managers. A “tentative/pending” letter of determination is sent to the unit upon receipt in the state office of the new unit application packet (which should be sent to the state PTA office within two weeks of organizing by the district). This is the letter of determination that a unit can use to open a bank account. Who requests the Letter of Determination? The PTA president requests a letter of determination from the state PTA office. The state office always sends the letter directly to the PTA president. An electronic copy is sent to the district president. Public disclosure laws require that the letter of determination be given to anyone who requests it. Such requests are directed to the president or treasurer of the PTA in question. The district PTA should not keep letters of determination on hand nor should the district or council provide a cover letter indicating a unit is in good standing. Only the California State PTA can verify PTA status. Where does the state PTA office send the packet? The California State PTA office sends the packet to the PTA president. The PTA president should provide it to whomever requests it. Records Retention Schedule Reprinted from California State PTA The Communicator, October 2009 It is very important that certain PTA records be retained. Listed below are items that must be reviewed on a periodic basis and kept in a safe place. Develop a records retention policy based on this list. _{PERMANENT STORAGE} Annual audit reports Articles of Incorporation Canceled checks, for important transactions (e.g., taxes, contracts) [Checks should be filed with papers pertaining to the transaction] Corporation reports filed with the Secretary of State Legal correspondence Group exemption documents 􀂈 Insurance records: o Accident reports o Claims o Policies 􀂈 Ledgers 􀂈 Minutes of executive board, association and committees (bound) 􀂈 PTA Charter 􀂈 Tax documents: o Exempt status o Group exemption o Letter assigning IRS Employer Identification Number (EIN) o State and federal tax forms, as filed 􀂈 Correspondence with state or federal agencies 􀂈 Trademark registrations Consider getting a file cabinet to keep at your school site so that PTA officers don’t misplace these items at home or move away with them. _{10 YEARS} 􀂈 Financial statements (year-end) and budgets 􀂈 Grant award letters of agreement _{7 YEARS} 􀂈 Payment authorization and expense forms o (receipts attached) for payments to vendors or reimbursement to officers 􀂈 Cash receipt records 􀂈 Checks (other than those listed for permanent retention) 􀂈 Expired contracts and leases 􀂈 Insurance incident reports 􀂈 Invoices 􀂈 Purchase orders 􀂈 Sales records _{3 YEARS} 􀂈 General correspondence 􀂈 Employee records (post-termination) 􀂈 Employment applications _{1 YEAR} 􀂈 Bank reconciliations 􀂈 Correspondence with vendors if noncontested 􀂈 Duplicate deposit slips 􀂈 Current bylaws, approved by state parliamentarian 􀂈 Standing rules 􀂈 Certificates of Insurance 􀂈 Inventories of products and materials, updated yearly When filing records, include the date they are to be destroyed. Review each year or two, at the end of a term. SPONSORSHIP GUIDELINES (Click here to go to printable pdf version of article) The law permits a nonprofit organization such as PTA, without payment of income taxes and without risking loss of tax exemption, to both: Engage in sales activities if any of four conditions are met with respect to such sales activity. Receive corporate sponsorships. FOUR CONDITIONS TO AVOID UNRELATED BUSINESS INCOME TAXATION (UBIT): 1. Sell donated merchandise 2. Substantially all help is donated 3. Activity is not a "regularly carried on trade or business" 4. In furtherance of PTA's exempt purpose . Some items fall in more than one category, such as Girl Scout cookie sales, which fall into three of the four categories. Girl Scouts cookie sales are conducted with substantially all volunteer help (#2 above) If the event is held only once per year it is probably not a "regularly carried on trade or business." Exception - Christmas Cards or Christmas Trees. (#3 above) The Girl Scouts maintain that their cookie sales are a "prop" to help carry out their charitable mission for which they were organized. It is part of their program to help girls mature. (#4 above) Gives the girls confidence. Teaches sales skills. Teaches how to count money. PTA & QUALIFIED CORPORATE SPONSORSHIPS Corporate sponsorship is a means of funding in which a corporation provides cash, products, or know-how to a charitable or educational organization in return for acknowledgement of thanks. The acknowledgement of thanks generally takes the form of public recognition for the sponsor's support. Sponsorships are an appropriate means of funding projects and programs that promote the objectives of an organization. Certain guideline must be followed to ensure that the PTA's Noncommercial policy is adhered to. ACCEPTABLE–Acknowledgements – It is acceptable to include the transmission or display of a sponsor's logos and slogans that do not contain comparative or qualitative description of its products and services. It may include sponsor locations, telephone numbers, and value-neutral description of a sponsor's product line or services. UNACCEPTABLE - Acknowledgements that include advertising (Endorsements) - To the extent that the acknowledgement exceeds mere identification and, instead, promotes the sponsor's product or services, the recognition may instead be treated as advertising rather than acknowledgement. Price information would generally be treated as advertising rather than acknowledgement. Any inducements to buy, sell, rent, or lease a sponsor's product or service would likewise be treated as advertising rather than donor acknowledgement. FOLLOWING PTA'S NONCOMMERCIAL POLICY Do not make a qualitative judgment on the sponsor's products or services. Do not include comparative language or language that implies good quality in the acknowledgement. Do not permit the sponsor to write the acknowledgement of thanks. Do not ask your members or the public to buy the products or services of the sponsor. Do not advertise a product or service. Do not endorse a product or service. PERMISSIBLE ACTIVITIES Give the corporate sponsor an acknowledgement of thanks in return for the donation. Identify the sponsor's name, a picture of their product, an address, phone number, Web page. Include the logo or slogan of the sponsor, for example: "Ford, Where Quality is Job One" or "Ford, Makers of Lincoln Mark VII". Provide free product samples. For example, it is acceptable to have a banner which states, "Pepsi: Valued sponsor of the California State PTA Convention - free samples at booth 56". PROHIBITED ACTIVITIES Do not include any comparative statements such as, "MCI is better that AT&T!" or "Chevy: Best Car in America!" Do not call for someone to purchase a product. For example, "List your home with Century 21 today!" or "Bank of America: Open an account today!" Do not hang a banner that states, "PTA hates Coca-Cola and loves Pepsi." SPECIFIC SPONSORSHIP CONTRACT ISSUES ROYALTY Percent of Gross Sales PARTNERSHIP Percent of Net Profit Under new regulations, it is acceptable for PTA to agree to an exclusive sponsorship. An exclusive agreement is one that prohibits competitors of the sponsor from selling at the event. The portion of the payment that reflects the exclusion element is taxable. It is acceptable for PTA to receive payments structured as royalties. Royalties are a percentage of gross total sales, regardless of whether the person paying the royalty makes a profit or a loss. The royalty is paid for use of the PTA name and logo. It is NOT acceptable for PTA to enter into a partnership (share of NET PROFITS) of a business. The PTA may provide a hypertext link from the PTA's Web site to the sponsor's Web site. But PTA must be seen to be "passively" allowing its name and logo to be used. PTA may not be too actively involved in soliciting traffic to the site. The PTA may not be characterized as endorsing the products offered on the site. This not only violates PTA noncommercial policy, but also may result in Unrelated Business Income Tax (UBIT). Additional information regarding PTA Fund-raising, Sponsorships and PTA's Noncommercial Policy can be found in Section 59 of the Finance Section of the California State PTA Toolkit. Information on the Noncommercial Policy is also located in the Bylaws for Local PTA/PTSA Units, Article III, a & b. Top of Page INSURANCE Download the 2009 Insurance Loss and Prevention Guide (English Version) Top of Page Knowledge is Power and Protection PTA Insurance information will be coming soon. It comes every year and can not be avoided. In fact it is mandatory and a stipulation of being a unit in good standing. “Participation in the California State PTA insurance program is required for all PTA districts, councils and units. The California State PTA arranges coverage; districts are notified of the cost for insurance in the fall. Premium costs vary depending on state wide losses during the previous years.” (California State PTA Toolkit) Unit premiums this year are $220 per unit (school site), plus an extra 5% for Workman’s Compensation of any wages paid over $1,000. Council premiums are $120 per council, plus the extra 5% if applicable. When the insurance packet is received, please remit completed forms along with premium payments through channels in a timely manner (by the given due date). Another key element of your insurance is the Insurance and Loss Prevention Guide. The hardcopy of the guide is mailed to all units, councils, and districts annually in the Fall Service Mailing from CSPTA—due out this month. An electronic version of the insurance guide was included on the CD in the Summer Service Mailing. Always consult this guide when planning any PTA activities. It tells you which activities are covered and which are not. You cannot proceed with activities that are not covered by insurance without assuming liability! If you have questions contact the insurance directly, it is a service for which you have paid. Top of Page Top of Page
Home \| Officers \| Councils \| Calendar \| PTA Areas \| Bylaws \| Dateline \| FAQs \| Resources & Links \| Site Map